Posts Tagged ‘Gross domestic product’

I have faith in Japanese resilience and will still stick my neck out and stay with my forecast that the Japanese economy will become a global “driver” through 2012 and 2013.

Japanese Gross Domestic Product grew by 1.5 % over the 3rd quarter (July – September) representing an annualized growth rate of 6 percent. This is the fastest rate of growth for 18 months. The Cabinet Office said today in Tokyo that at 543 trillion yen ($7 trillion), the economic output was back to levels last seen before the March 11th Great Tohoku quake and tsunami.

The growth seems to have been led by exports rather than the domestic impetus measures to recover from the earthquake or the subsequent spending on rebuilding infrastructure. These probably need 2 more quarters to kick-in but that means that this growth is still vulnerable to current global weaknesses.

However the optimistic “glass half full” view would be that Japanese exports have grown mainly to Asia and the earthquake rebound has yet to come. Moreover this has happened in spite of a very high Yen. Any recovery in Europe and N. America would be a further boost to an economy which is large enough to then act as a global motor.

The rebound underscores the speed at which Japanese industry has been able to get back on its feet after the March 11 earthquake and tsunami, rebuilding factories and re-establishing supply chains severed by the destruction.

Exports jumped 6.2 percent as manufacturers got production back on track. Private consumption, which accounts for almost two-thirds of Japan’s economy, grew 1 percent, helped by a rebound in consumer sentiment and replacement demand in the tsunami zone.

Still, policy makers and economists also worry that the punishingly strong yen of recent months as well as weak growth in major trading partners, like the United States and China, will take a toll on Japanese exports. The crisis at the Fukushima Daiichi nuclear plant, meanwhile, has thrown the country’s energy policy into disarray and cast a pall over Japan’s recovery.

Compared with the third quarter of last year, GDP grew by 1.2 percent, according to StatisticsSweden (SCB). This is the highest Swedish growth ever measured. GDP figures were higher than analysts had anticipated. According to Reuters, they expected on average, a growth of 7.0 per cent annually and 1.0 percent from the last quarter.

During the full year 2010, GDP grew by 5.5 percent from the year before, the largest increase since 1970. In 2009, GDP shrank by 5.3percent. It was household consumption which gave the largest contribution to GDP growth, according to StatisticsSweden.

The Swedish economy is growing across the board. The recovery continues with positive signals also from the labor market. It means that the Riksbank will most likely continue to raise rates. The labor market is developing well and that the hours worked increases mean that households are well equipped for future interest rate hikes. That you get such a strong figure, a growth of over seven percent, also creates a positive psychological effect and a confidence in the Swedish economy which is important. This is something completely different than when the crisis was at its worst.

SBAB’s chief economist Tomas Pousette:

We knew that growth was strong but did not anticipate anything this strong. We expected a number around 6.5%. The economy is at full speed. But it is still in the vicinity of what the Riksbank has anticipated.

Finance Minister Anders Borg:

In the budget we expected that we would land on 4.8 percent growth for 2010, and now we arrive at 5.5 percent. This is a stronger growth than we expected. There is a real challenge ahead for us to cope with both strong growth and low unemployment without creating imbalances.

Chinese factories increased production in August and money growth easily topped analysts’ expectations, according to data on Saturday, showing that the economy remained buoyant despite government efforts to clamp down on bank lending and property speculation. Inflation in China sped to its fastest pace in 22 months, though the bulk of price rises stemmed from higher food costs, which analysts have said should be transitory after a spell of bad weather this summer.

image: buyusa.gov

Indian shares have risen to their highest level in more than two and a half years after data showed industrial output rose faster than expected. Figures released after Friday’s market close showed July’s factory output was up 13.8% compared with a year ago. India’s benchmark Sensex index rose 322 points, or 1.7%, to 19,122, its highest since January 2008. Banks led the gains as investors expect demand for loans to rise on the back of an expanding economy. Shares in State Bank of India, the country’s largest lender, were up 4.3%. ICICI Bank shares rose 3.5%, while HDFC Bank was 1.1% higher.

With a good monsoon this year inflation in food prices in India should now reduce sharply and if industry and manufacturing maintain their spurt, a total 10%+ GDP growth for 2010 -11 becomes probable.

Most Asian stocks too gained momentum on Monday. At 11.20 am today, the Sensex was trading up 293.53 points or 1.56% at 19,093.19, while Nifty was trading higher by 85.90 points or 1.52% at 5,725.95.

Europe and the US will continue to experience a prolonged period of low or choppy economic growth but this will have little impact on the growing domestic consumption of China and India. Companies selling into these nations are experiencing buoyant trading conditions.

This should be sufficient to mitigate the risks of a prolonged double-dip recession in Europe and the US but will not be enough to avoid it.

The Indian monsoon season officially lasts from June to September. When average rainfall over these 4 months is close to or slightly above the long term average ( from about -5% to about +10%), the monsoon can be termed to be “good”.

With 3 weeks to go rainfall is running at 1% above the long term average and has been reasonably uniform over the whole country.

Despite a steady decline in the share of agriculture and allied activities in GDP to about 14.6 percent, it continues to be the mainstay of majority of the population, of about 52 percent of the work force, and remains critical from the point of view of achieving the objectives of food security and price stability.

In 2009-10, there was a poor monsoon with rainfall being about 22% less than the long term average. Consequently the Agricultural growth rate was less than 2% (1.86%). The total GDP growth was held back to around 6%. The difference between a good monsoon year and a poor year is thought to be around 2% points for GDP: